Hot Topics from the Exempt Organizations Office

Lois Lerner, Director of Exempt Organizations at the IRS, gave a speech at Georgetown University Law School this past April on what is currently going on in the Exempt Organizations office.

One of the topics Ms. Lerner discussed in detail and warned against was including Social Security numbers on Form 990. Do not include Social Security numbers anywhere on Form 990 or any of the schedules. According to the Chronicle of Philanthropy, Social Security numbers have been listed for donors, trustees, employees, directors, scholarship winners and tax preparers. The IRS does not ask for Social Security numbers on Form 990. The IRS requires Form 990 to be public document; therefore, any Social Security numbers listed on the return are also made public.

She also discussed the importance of good governance practices within nonprofit organizations. In recent years, the IRS has put a greater emphasis on good governance with the inclusion of several additional questions related to this area on the revised 990. An initial analysis was done on 501(c)(3) organizations already selected for an IRS exam based on other non-governance criteria . The analysis found that those organizations that had the following governance practices in place were more likely to be tax compliant.

- Had a written mission statement
- Always used comparability data when making compensation decisions
- Had procedures in place for the proper use of charitable assets
- The 990 was reviewed by the entire board of directors

With the recent automatic revocation of tax exempt status by the IRS, the IRS has become aware that some organizations filed the 990-N e-Postcard instead of the required Form 990 or 990-EZ that was required of the organization. In addition, several thousand organizations filed both a 990-N and another series of Form 990 in the same year. Of course, the IRS will be notifying these organizations for further explanation of the incorrect filing.

The preceding items are important to note so that your organization stays in compliance with IRS requirements and does not become one of the organizations that is contacted by the IRS.

Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.